House Votes to Rein in Wall Street Pay

(AP)  The House voted Friday to slap restrictions on how Wall Street executives are paid after nine banks that took government bailout money rewarded thousands of their employees with bonuses topping $1 million each.

Bowing to populist anger and defying President Barack Obama's suggestion that government rely on incentives instead of intervention to curb excessive salaries and bonuses, the House passed the bill on a 237-185 vote.

"This is not the government taking over the corporate sector. . . . It is a statement by the American people that it is time for us to straighten up the ship," said Rep. Melvin Watt, D-N.C.

Although the bill doesn't give Mr. Obama exactly what he wanted, it advances the first piece of his broader proposal to increase oversight of financial institutions. The Senate was expected to take up the package after Congress returns in September from its summer recess.

The House bill includes Mr. Obama's suggestions to give shareholders a nonbinding vote on compensation packages and prohibit directors on compensation committees from having financial ties to the company and its executives.

But the bill goes farther than Mr. Obama wanted by prohibiting pay incentives that encourage employees to take financial risks that could threaten the economy or viability of the institution.

Mr. Obama said giving shareholders a "say on pay" and diminishing management influence on pay packages would go far in curbing the lavish pay seen at some banks.

Rep. Barney Frank, D-Mass., who sponsored the bill, said the extra regulation is necessary to ensure bankers and traders aren't rewarded only if they take big risks. Under the provision banning risky incentive-based pay, regulators would be given nine months to dictate precise guidelines.

If a bet goes wrong, "the company loses money and the economy may suffer, but the decision makers do not," he said.

The vote came one day after New York Attorney General Andrew Cuomo reported that the nation's biggest banks awarded nearly 4,800 million-dollar-plus bonuses in 2008 even as their profits dwindled and they accepted billions in government aid.

Citigroup, which is now one-third owned by the government after taking $45 billion in government money, gave 738 of its employees bonuses of at least $1 million, even after it lost $18.7 billion during the year, Cuomo's office said.

Aware of voter outrage on the bonuses, Republicans reluctantly pushed back. They said severe restrictions should apply only to banks that accept government aid.

The legislation's ban on risky compensation would apply to any firm with more than $1 billion in assets, including bank holding companies, broker-dealers, credit unions, investment advisers and mortgage buyers Fannie Mae and Freddie Mac.

The effect will be to force "financial institutions who did not contribute to the crisis to pay for the mistakes of others," said Rep. Michael Castle, R-Del.

Rep. Jeb Hensarling said the government would be better off terminating the $700 billion bank bailout program established last year.

"If you quit bailing out risky behavior, Mr. Chairman, you'll receive less risky behavior," said Hensarling, R-Texas.

Republicans also cast the proposal as too liberal even for Obama.

Frank snapped back: "We are not taking orders from the Obama administration."

Also on Friday, a group of 11 bipartisan senators pressed Federal Reserve Chairman Ben Bernanke to name the financial institutions that have received emergency assistance from the Fed and disclose how much help each received.

The Fed has invoked its emergency powers to provide assistance to some banks, but has not disclosed the details out of concern that the information would cause a run on the institutions.

The senators, led by North Dakota Democrat Byron Dorgan and Iowa Republican Chuck Grassley, said the information should be released now that banks are reporting profits and paying back bailout money.



By Associated Press Writer Anne Flaherty

[nottellin1]

If the government had stayed out of it in the first place these companies would hyave failed and there'd be no bonus money to give out. Barney Frank is pissed because some of the money he authorized is being used to reward employees that helped these companies remain viable. Consider this: if the government limits the pay of executives thyat manage well and will bail out a company that executives have managed badly, where is the incentive to manage well?

[nottellin1]

Doesn't Barney Frank remind you of Elmer Fudd???? He is just as idiotic too!!!

[robinspp]

Bush destroyed the US economy. Obama is fixing it. He is too good. Someone has to control the swindlers; otherwise few hundred CEO?s will take every Penney from the people?s pocket. They are criminals, they should be put in prison.

[robinspp]

Bush destroyed the US economy. Obama is fixing it. He is too good. Someone has to control the swindlers; otherwise few hundred CEO?s will take every Penney from the people?s pocket. They are criminals, they should be put in prison.

[pensacola8-2009]

If congress was smart, the best way to approach the greed is right at the heart of the engine of business that compensates executives so lavishly.

This can be done by passing a law that lowers the bond rating three letter grades for all publicly traded companies on the stock exchange when any executive is compensated with greater salary than $400,000. This permits the salary to be high as it currently is, but when that company borrows, it will be forced to pay higher interest for its loans than companies who compensate at a lower rate. Compare a billion dollar loan at 3% to 7%. The deterence will be a strong signal that those coming to Wall Street to get greedy will pay when they borrow. If they take lower compensation during the term of the loan, then they can raise their bond ratings and borrow at a lower interest rate again.

[pepperwood2]

House Votes to Rein in Wall Street Pay......Vote Comes after 9 Bailed-out Banks Gave Execs Bonuses Topping $1 Million Each

Yes And these same Congressional Elite all voted in favor of the largest Congressional Pay Raise in History that BO quickly signed. The no change business as usual politics that got us into this mess. Its enough to make you puke.

[ibsteve2u]

I don't mind paying Congress well...anything that makes them less tempted by those big wads of dollars the lobbyists have is a good thing.

If anything is apparent, depending upon Congress - or the leaders of any large American entity - to integrate "enlightened self-interest" into their actions is foolhardy.

Best to pay 'em well, and make the club that falls upon them for corruption much heavier and much pointier.

[ABM_21]

Reigning in runaway bonuses on Wall St. Now, there's a good idea if I ever heard one. Aren't these the same clowns that caused this financial debacle in the first place? Yet, these are the clowns receiving billions in taxpayer money for 'bonuses' they neither earned nor deserved. If I recall, a 'bonus' is earned by someone for doing a good job, not just because they happen to work in a particular industry. If that's the way pay is designed in the financial industry, perhaps they should consider changing how the employees are paid.
There has also been this rush by some of the more ignorant factions on this forum to blame this financial fiasco on housing market, most notably, on all those poor people who got 'houses they couldn't afford'. Ahh yes, blame the victim; a typical Republican approach to solving a problem they created. For one thing, I guess none of these Rethuglicans ever heard of predatory lending. These were lenders who lent people the money, but then had conditions written into the loans which required a balloon payment towards the end of the loan. This, along with Bush's love affair with outsourcing, cost many people to lose their jobs, which means they could not make these absurd payments. Why did they sign off on these loans? Simple: If that's the only loan you can get in order to finance a house, more often than not you take it. Wall St., more often than not, plunders Main St. in order to make a fast back. The poor were never to blame for this; it was greed at the top.
No one who borrowed money from the government in order to stay in business deserved a 'bonus' of any kind. Add to that fact many of these people were already super wealthy, so missing one bonus was NOT going to hurt them that much.
The government doesn't determine what the poor make? I guess you never heard of 'minimum wage' then. You know, the lowest amount you can pay any employee on the books, which is why so many Rethuglicans want to do nothing about illegal immigration. That way, they have a steady supply of workers available for exploitation.

[hungry1968-16]

by geecee827 July 31, 2009 4:45 PM EDT
Well, I'll answer it. Pearl Harbor had nothing to do with Hitler (sort of like 9/11 had nothing to do with Iraq). Nevertheless, Hitler was bombing the s**t out of England and taking over all of Europe. How long do you think we should have waited before we got involved?







Japan and Germany were allies in WWII. When we were attacked by Japan, we were attacked by ALL of the "axis" powers - Germany, Japan, and Italy.

We provided all sorts of material support to England and the allies, but didn't get involved - militarily - until Pearl Harbor.

Disassociating Japan from Germany in WWII, like in your comparison to 9/11 and Iraq, is foolish.

[sjc_1]

"...government taking over the corporate sector..."

Those wrong wing nut liars are at it again. Say anything you can to put fear into the minds of the public. These lying sacks ought to be held accountable for their fear mongering. There is free speech and then there is yelling fire in a crowded theater. There is a big difference and rational and sane people know what that difference is.

[DocD--2008]

"President Barack Obama has proposed trying to discourage excessive corporate pay by giving shareholders a nonbinding vote on compensation packages and requiring that compensation committees not have financial relationships with the company and its executives."

Make it a BINDING vote and it may work a bit better.. Nonbinding means just that, it's a vote that does not count for anything, and they know this.

They should also take anyone who gave these huge bonuses and the ones who excepted them and put them in JAIL (after taking all the money back). Maybe then Wallstreet will start to understand, if not, they can join the rest of them in jail.